GST probe expands to online travel portals following hotel notices
What's the story
The Goods and Services Tax (GST) department has expanded its investigation to include online travel portals. The move comes after the department issued notices to hotels across India for allegedly underreporting GST on restaurant services. According to sources, the revenue department is trying to determine if hotels are accurately reporting the taxable values of bookings made through these platforms.
Tax scrutiny
Should tax be levied on total amount paid by customers?
The GST department is also looking into whether the tax should be levied on the amount paid by customers through online travel portals or just on what hotels receive after deducting the platform's commission. Officers in charge of Central GST (CGST) have reportedly written to these platforms, seeking booking-level data to investigate possible double taxation scenarios.
Tax complexity
Tripartite structure complicates the issue
Tax experts have pointed out that the issue of GST on online travel bookings is complicated by the involvement of three parties: the hotel, the online travel agent, and the customer. This tripartite structure, along with a confusing rate structure, makes it difficult to determine how much tax should be levied and at what stage in these transactions.